Speech by Minister for Law and Minister for Foreign Affairs, K Shanmugam, at the Association of Muslim Lawyers Annual Lecture 2014

25 NOV 2014

25 Nov 2014 Posted in Speeches

Introduction

I thank the Association of Muslim Lawyers for inviting me to speak with you today.
First I would like to give an overview of how our legal sector has been doing, so that you understand what we are doing, how we are doing, and some of the steps that the Ministry of Law has taken to try and help our legal industry tap into the opportunities that are now available in this region.
The key objective for us at Minlaw is very simple – we want to position the legal sector in Singapore as a vibrant industry, with opportunities for all of you.
We want each one of you to do well. We will create the opportunities but it’s up to you to take them.

Progress of Singapore’s Legal Sector
If we look at the progress of the legal sector, as a result of several steps that have been taken, the value added of legal services has grown steadily at about 7% per year. This is higher than GDP growth, which was about 5.4% per year.
The growth in legal services has been driven largely by the export of our legal services to other countries, and that has been growing at about 9% per year.
We have also succeeded in developing international arbitration in Singapore. For that, we took a very focused approach to make ourselves a top international centre.
We put in policies, we changed the legislation, and within the last five years, from basically a standing start, we have now shot up the rankings, and are now the third most preferred seat of arbitration worldwide.
It didn’t happen by accident, what happened was that we created the ecosystem.
We created an international board for SIAC (Singapore International Arbitration Centre) because when people want to appoint arbitrators, they want a panel, they want to know that there is an arbitration centre which is internationalist in outlook, and that’s how work comes.
Work which would otherwise not have come, came and some of our Singapore law practices (“SLPs”) are ranked among the top arbitration firms globally.
If you look at the SIAC’s caseload for new cases, in 2008 it was 99, it’s now 259 cases.
In 2013, last year, almost nine out of 10 cases were international in nature. That means that these cases have nothing to do with Singapore and most of them would not have been heard in Singapore.
Now what is important to note here is that out of the 86% of the new cases that were filed that were international in nature, more than half involved Singapore law firms.
So nearly nine in 10 cases have nothing to do with Singapore, and in more than half of those cases, Singapore law firms were involved. This is creation of work for Singapore law firms.
Asia-Pacific’s share in the legal market is expected to double from US$109 billion in 2012 to US$215 billion in 2017, to become the second largest regional market.
In contrast, North America and Western Europe’s share in the global legal market is predicted to fall from 69% in 2012 to about 61% by 2017, and may continue to fall for some years. It is partly relative because Asia-Pacific is simply booming as an economy.
We see that regional demand for legal services will be driven by domestic and cross border M&A activity, finance and capital markets, infrastructure and capital investments, and cross border trade.
This presents tremendous opportunities for our legal sector.
The government is very focused on the future and we want to create as vibrant a sector as possible for your sake, but we have to partner with you.
The academia, the profession - we have to work together to try and make that happen as we have already done for the last few years.
Our lawyers are well-positioned to get the work flowing into the region if they can be regional leaders with multi-jurisdictional capabilities.
Our strong brand and trust premium is our vital asset. As long as we do not devalue our position as a neutral international centre with outstanding courts and unchallenged integrity, we will be strong and can position ourselves as the preferred venue for dispute resolution.
Some of you may say – well all of this benefits the big law firms, how does it benefit me in the small law firm?
I can create the framework; I can make the work come into Singapore. Small firms which can provide good quality legal service can get some of the work when there is so much work.
And we are mindful of the smaller law firms – and are looking at the things that we can do as a Ministry to try and help you.
But while I can create the right circumstances for new work to come in – and as you see, a lot of work has come in – I can’t dictate who the work should go to.
That’s where you will have to come in. You will have to do your part, but we will try and create the circumstances.
Let’s now look at the initiatives to develop the legal sector as a whole.

Key Initiatives to Develop the Legal Sector
1. Developing SLPS
We are working actively on some initiatives to help small and medium law practices, for example exploring business structures that can help firms strengthen their practice and provide creative and seamless services to clients.
The latest changes can allow you to tap into capital that you won’t otherwise have, and allow you to then expand your practice and obtain capital from non-lawyers. So that’s a major change.
We are working with SPRING and other agencies to see how small and medium law firms can tap on existing schemes to build capabilities.
This may include developing structured programmes to train lawyers in areas such as management, leadership and other soft skills; and hiring of experts to deepen expertise in certain practice areas.
And we will help small law firms get access to technology to improve the quality and efficiency of their legal services,
For example: the PIC; and IDA has got an iSPRINT scheme; and SPRING’s Capability Development Grant.
These schemes and grants already exist, and basically mean money for you. But the take-up is not very strong, and I think not many even know about them.
So we have done a lot. We have put the schemes together and have made it workable for law firms.
We will go to the next step, which is to try and push it – tell the small and medium law firms about these schemes rather than waiting for you to check up and come and apply – and how we can help you access them. So we will do all of that.
We also want to develop our homegrown Singapore law firms to become leaders in the region.
MinLaw has been working with EDB to engage and support SLPs in their regionalisation efforts through, for example, training grants to support capability development and secondments so that you can second people and get expertise.
We have introduced tax incentive schemes to support internationalisation and expansion.
We have organised seminars and trade missions to new countries which are opening up, like Myanmar.
We are also looking into ways to encourage law firms to leverage on IT to enhance the running of their practice and offer solutions to clients.
So that’s one area. We are focusing on small and medium law firms, and we are also focusing on the larger law firms which can go regional.
Next, we look at developing Singapore as a preferred venue for dispute resolution, to bring in even more work into Singapore.
1. Developing Singapore as a Preferred Venue For Dispute Resolution
We look at what we have done in the arbitration field, where we have been successful.
We are now working to develop the SICC. The legislative amendments were passed this month, and the SICC will begin operations next year.
By the opening of the legal year, a very high quality international panel will be announced, which will be truly outstanding and will put us in a different league.
We will also focus on the Singapore International Mediation Centre (“SIMC”) which was launched earlier this month.
But what does the SICC mean for you?
The judgements are enforceable as judgments of the Supreme Court of Singapore.
The work in SICC would be work which would otherwise not have been heard in Singapore. It’s got nothing to do with Singapore and Singapore lawyers would otherwise not have been involved in it.
Now we are making a venue available for foreign parties who may have business in the region but for one reason or another may not wish to litigate in those countries, and who also do not want to arbitrate.
These parties will have access to the courts in Singapore.
The SICC judgments will be as enforceable as judgments of the London courts or the New York courts, which are regularly chosen by parties to adjudicate their cross-border disputes.
But what’s in it specifically for you?
We aim to attract cases which would otherwise not have been heard and may not be governed by Singapore law, like what we did in the arbitration sector.
But as these cases come into Singapore, inevitably, Singapore lawyers will get involved, just like how more than half of the new cases in the arbitration sector involve Singapore law firms.
So if we succeed in this, there can be a lot of new cases in the courts which can involve Singapore lawyers.
For the SIMC, we will replicate the success in arbitration.
We will have an international board, a panel of high quality mediators certified by the Singapore International Mediation Institute; a panel of industry experts and specialists; and user-centric innovative mediation services and products.
The SIMC will strengthen our mediation offerings and would complement arbitration and litigation.
We’re thinking of a couple more ideas to complement this even further and strengthen our position as the leading international dispute resolution and legal centre in all of Asia.
Next, let me touch a little bit on how we have been modernising our regulatory and legal framework.
1. Modernising Our Regulatory and Legal Framework
We have amended the Legal Profession Act to update the regulatory framework for the profession. The changes will take effect sometime in the second half of next year.
At the individual level of the lawyers, there will be a new Professional Conduct Council chaired by the Chief Justice. This Council will oversee all professional conduct matters for lawyers.
There will be a single professional disciplinary framework for all Singapore lawyers and foreign lawyers, so there will be an even playing field. There will be the Review Committee, Inquiry Committee and Disciplinary Tribunal, under the ultimate oversight of the Supreme Court.
The registration of foreign lawyers will come under a new Legal Services Regulatory Authority, which will be a department under MinLaw.
At the level of law firms, the regulatory authority will register and oversee the regulation of all law practice entities.
And there will be a framework to regulate alternative business structures. What does that mean?
Throughout the world, new structures are developing. We have to anticipate and we have to start providing the framework for that.
MinLaw will oversee that, and it can be a good thing.
For example, as I said, for smaller and medium sized law firms, it can now give you access to technology and capital which you may not otherwise be able to access.
If you look at some of the other areas, most of you will know about the Reform of the Family Justice framework.
The Family Justice Act just passed this year in August, and the Family Justice Courts (“FJC”) were launched on 1 October.
Some key features of the Family Justice Act: The FJC will hear all family-related proceedings, and it comprises three courts: Family Courts, Youth Courts and the Family Division of the High Court, which will be headed by the Presiding Judge of the FJC.
In the first instance, the Presiding Judge will be Judicial Commissioner Valerie Thean.
The FJC will have the power to make relevant orders and appointments to protect the welfare of a child who is a subject of such proceedings.
Other enhancements will be made, for example: strengthening community touch points, enabling them to direct families to the appropriate agencies to assist them, establishing Divorce Specialist Agencies to provide relevant services, introducing pre-filing consultation sessions to help parties make an informed decision and prioritise the welfare of their children, enhancing court case management policies and processes, and strengthening the court’s powers in the resolution and adjudication of family disputes.
Basically, I want to move away from the traditional approach of long affidavits going back to 20 years of marriage.
What are the issues in a divorce? Has the marriage broken down? By the time they are in court, it probably has. What are the assets and how are they to be divided? If both parties are honest, it’s fairly straightforward. There’s maintenance and children.
The courts don’t need to relive the family history over the last 10 years or 15 years. Going over who did what and what happened and all the angst and unhappiness increases the cost, increases the bitterness and does nothing to the issues.
Sometimes it’s the lawyers who do this, sometimes the lawyers are under pressure from clients and are unable to say “this is irrelevant”.
This goes on and on and on in the adversarial system. We will move away from this.
The judge will give direction on what the issues are. In fact, I’ve directed that we should have standard forms, one page for each party to say what the issues are.
They can file that, and if there is anything else that they want to say, they will have to get leave from the court and decide based on that. The judge will direct the parties and say what is relevant.
Keep it simple, focus on the real issues, get it moving, focus on the children.
We have also enhanced the Criminal Legal Aid Scheme (“CLAS”) which I think not a lot of people have understood. The enhancement introduces direct funding of criminal legal aid through CLAS.
So our funding supports the Pro Bono Services Office’s (“PBSO”) operating costs and provides volunteer lawyers with the honorarium that they get.
The funding will enable the PBSO to help up to 6,000 Accused Persons per year. That’s 15 times the number that CLAS currently assists.
And it will allow payment to lawyers who handle these cases – as I shared last year.
The Criminal Legal Assistance Steering Committee is developing the policies and framework for the enhanced CLAS and is looking to launch it next year.
Basically, the government puts the money in, and that money will be distributed to lawyers for handling these cases.
It’s not going to be the full fees, but it’s much better than the situation now where those people are either not represented, or they come to you and they can’t pay you anyway.
We need your continued support and good work to support CLAS.
So the enhancements to the legal sector I think will benefit Singapore lawyers and law firms, and it’s really up to you to make the most of the opportunities.

On Opening up
Mr Marican made some comments on the opening up (of the legal sector), he expressed some concern as to whether it is too fast.
The legal sector has many aspects; I would like to broadly mention two.
You have litigation, which I think is the bread and butter of many of the small and medium sized law firms, and some of the bigger law firms. Family law, criminal law, pure domestic law areas.
Let’s be clear: those are ring fenced, those are not open for foreign law firms. They have never been, and I have no intention of opening them up. Only local lawyers can handle them. That’s in the legislation.
If you broadly take the second aspect, corporate/banking law Involving International Banks Cross Border Financing and so on, we have defined that in the legislation as “Permitted Areas”.
These have been opened up to some foreign firms under license, with conditions.
Among the conditions would be, depending on the business structure, the ratio of local lawyers to foreign lawyers, and how many local lawyers we expect foreign firms to employ each year. They are assessed based on that. They have to provide employment opportunities.
I’ve made it clear that by “opening up”, if work moves from a local law firm to an international law firm, there is no benefit. That’s not the purpose of opening up.
I have to see that there is new work, they are bringing in new work, that the total value of the legal sector is growing, and that most of their work is the new work.
Then there is benefit to the opening up because the total legal pie has grown, which it has. And local lawyers get employed to do this cutting edge work, which is also the case. A large number of young local lawyers are getting employed.
For those of you who don’t know this, I think a bit of history as to how this came about is useful. I hear this comment about opening up, and there is a lack of clarity on what exactly is meant by opening up.
In the period 2005 – 2007, there was a Committee headed by Justice Rajah, he was a Judge of Appeal then. The major law firms that would be directly affected by this – Rajah & Tann, Drew & Napier and Wong Partnership – were part of that Committee.
All their senior partners recommended that there be this opening up. So it was a recommendation by the profession to the government. They put it across on the basis that it would be good for the legal profession.
So really we’ve opened up at the request of the profession, and I think the profession must understand that. This is done at your request.
And when you say opening up, what exactly is meant by opening up? It’s as I said, in a limited area, for a limited number of foreign law firms in the international sector, where there will be international and local law issues mixed up.
It makes sense for Singapore to grow as a financial centre, as an arbitration centre, and as an international legal centre, to have this.
Can you be an international legal centre, a vibrant centre, to get all this work, and yet be a closed shop? It’s not possible.
But we will be careful. As I said, no government can give a guarantee about future governments.
All I can say is my intention. And my intention is, I don’t see any reason for opening up any other sector beyond what has been opened up, which is the international corporate banking financial sector if you can put it that way.
And I don’t see any need to go much further in opening up, in terms of the number of players, but we will have to look at these as the economy grows and as the pie grows.
We can only work on these things if we work together through consultation, and we have to try and make sure that it’s best for everyone.
But the government also has a duty beyond lawyers, to the broader community. And we also have to look at what’s good for the economy as a whole.
The financial sector contributes close to 11% of the GDP, and the tens of thousands of jobs there must be protected as well.
I’m happy to take questions and thoughts.

Last updated on 14 Jul 2015